Bitcoin's fair value stands at $224,000 according to Bitwise Europe's sovereign default model — but the cryptocurrency is trading roughly $150,000 below that, around $72,000 as of early June. The gap between the model's estimate and the market price actually widened in May, after a rally to $83,000 was erased by $1 billion in exchange-traded product outflows. That outflow total was enough to reverse the month's earlier gains and push the discount to the model's value even deeper.
What the model sees
Bitwise Europe uses a sovereign default framework to value Bitcoin — the same kind of analysis normally applied to government bonds. The model treats Bitcoin as a form of sovereign credit risk, and its output is a fair-value estimate of $224,000. The firm has not released the full methodology, but the result suggests Bitcoin is substantially undervalued by traditional risk metrics.
The May shakeout
Bitcoin touched $83,000 in May, its highest level in months. But the rally didn't hold. Net outflows from crypto ETPs hit $1 billion during the month, according to available data. Investors redeemed shares even as the price climbed, a classic sign of profit-taking or shifting sentiment. The selling pressure pushed Bitcoin back below $75,000, and it hasn't recovered since.
Why the gap grew
The difference between the model's $224,000 fair value and the market price expanded over the course of May. That means Bitcoin became even cheaper relative to the sovereign default metric — but the market hasn't yet bought the thesis. The outflows suggest traders are still risk-off, at least for now. The model's fair value, meanwhile, remains static until Bitwise Europe updates its inputs.
Bitcoin continues to trade well below its model-based valuation. Whether that gap narrows will depend on whether demand returns and ETP flows turn positive. No new model updates from Bitwise Europe are expected this week.
